Asian Stocks Fall for Fourth Week as Oil Prices Surge to Record

By Hanny Wan and Shani Raja

July 5 (Bloomberg) -- Asian stocks fell for a fourth week, on concern record crude oil prices will slow global economic growth and erode earnings. Japan's Nikkei 225 Stock Average posted its longest losing streak in 54 years.

BHP Billiton Ltd., the world's largest mining company, led declines on concern metals demand will drop. Toyota Motor Corp., the world's second-largest automaker, dropped after its U.S. sales slumped last month. Posco led steelmakers lower on speculation lower vehicle sales will reduce demand for the metal.

``The world has definitely turned bearish and sentiment is very negative,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``The price of oil at this time is choking demand. That's what the world's equity markets are reacting to.''

The MSCI Asia Pacific Index dropped 3.1 percent to 132.78 in the past five days, with a gauge tracking material producers posting the biggest losses among 10 industry groups. The four weeks of declines were the most since a six-week losing streak that ended Feb. 8.

Japan's Nikkei 225 Stock Average retreated 2.3 percent this week to 13,237.89. The measure has fallen for 12 straight days, the longest losing streak since 1954.

Malaysia's Kuala Lumpur Composite Index dropped 4.7 percent this week to the lowest since March 6, 2007 on concern rising political tension will hurt investments. Trading on the country's stock market was suspended July 3 due to a systems failure.

Biggest Threat

The MSCI Asia Pacific has slumped 16 percent this year amid mounting credit losses at the biggest financial institutions and as central banks across Asia raised borrowing costs to curb inflation. Finance ministers from the Group of Eight nations said last month surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy.

BHP retreated 5.1 percent to A$40.70 this week. Rio Tinto Group, the world's third-biggest mining company, declined 4.8 percent to A$125.70. Jiangxi Copper Co., China's largest publicly traded producer of the metal, dropped 5.6 percent to HK$14.26 in Hong Kong.

BHP, the world's sixth-largest producer of primary aluminum, also fell after Credit Suisse Group cut its earnings estimate for Alcoa Inc. and Century Aluminum Co. Analysts said profits will be hurt by higher energy and materials costs and a lower average price for the metal.

Toyota, which derives a third of its revenue from North America, dropped 3 percent to 4,920 yen this week. Its U.S. sales slumped 21 percent in June, the company said this week. Honda Motor Co., Japan's second-largest automaker, lost 1.9 percent to 3,580 yen. Vehicle sales plunged 18 percent in the U.S. last month, the steepest slump in almost six years.

`Disappointing' Earnings

General Motors Corp. yesterday tumbled to the lowest price since 1954 after Merrill Lynch & Co. said the largest U.S. automaker may face bankruptcy as U.S. auto demand slows.

Posco, Asia's third-biggest steelmaker, fell 9.6 percent this week to 482,000 won. BlueScope Steel Ltd., Australia's No. 1 steelmaker, tumbled 12 percent to A$9.76. JSW Steel Ltd., India's third-largest steelmaker, slumped 23 percent to 753 rupees.

Cathay Pacific Airways Ltd., Hong Kong's largest airline, lost 5.4 percent to HK$13.98 this week after saying on July 2 that earnings will be ``disappointing'' because of rising fuel prices. Jet fuel has more than doubled in the past year, reflecting the surge in oil. Oil futures climbed to a record $145.85 a barrel yesterday on speculation tension in the Middle East may worsen.

``Nobody wants to hold on to stocks right now,'' said Choi Min Jai, who helps manage about $5 billion at KTB Asset Management Co. in Seoul. ``The slowdown in the global economy is being felt. There is rising concern higher oil prices will mean higher inflation, which means lower demand.''

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net